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Diversification: the Art of Spreading Wealth

According to Biblical accounts, the fabled King Solomon was a master at diversifying his wealth and conducting trade with many neighboring peoples, entering into a profitable alliance with King Hiram of Tyre, among others. And what Solomon knew – that diversifying assets outside the country can be profitable – applies today for investors of all types. As Jason Hartman advises, spreading investments among diverse markets offers protection against a loss in one or more of those markets.

Diversifying can be as simple as purchasing more than one investment property in your area, or building a portfolio of multiple stocks. Or it can involve more ambitious steps, similar to Solomon’s, of pursuing investment opportunities outside the country.

According to recent reports on investment activity, the emerging recovery from global recession is being led not by developed countries like the US, Canada and Europe, but by other emerging countries. Although these less developed markets can be volatile, with the potential for political upheaval and social unrest, investments there can be less costly and yield significant returns.

In real estate investing, for example, foreign markets can offer unexpected opportunities, particularly in areas catering to retirees. And as infrastructures expand with foreign investments, these countries may provide investment possibilities that aren’t necessarily available at home. Foreign currency rates can also help make the investment work.

Although leading indicators can provide a picture of trends and potential outcomes for selected investments, a variety of unexpected turns can change the entire investment picture in a given market. For those reasons, it makes sense to maintain connections with experts and those familiar with the area where you’re interested in investing.

Whether you choose to invest in opportunities outside the country or keep your investments at home, it’s important to study the “culture” of the investment you’re interested in. Research the opportunity thoroughly and try to get information from those who are already investing in it. Prepare a set of specific questions for your meeting with an adviser and be prepared to discuss a variety of options. If you are interested in foreign investment opportunities, investigate the country in question thoroughly. Learn about its history, political stability and economic resources, as well as any projections about future growth. Armed with this information, you can work with your adviser to make the right decisions for your investing situation.

In a rapidly expanding global marketplace, investing opportunities can quickly appear anywhere – close to home or around the world. By following Jason Hartman’s recommendations and the example of King Solomon, you’ll be able to diversify assets in as many new markets as possible for a profitable investing future. (Top image: Flickr | ellnorton)

The Solomon Success Team


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